April 2008

How much does it really cost when you get sick?

A recent study has put a financial value on something we sometimes hesitate to admit:  illness can be a very, very expensive proposition.

In the year following her diagnosis, a Canadian woman with breast cancer will experience, on average, a 27% drop in income. This percentage decrease in income is significant.  And, in the case of being self-employed or part-time employee, this percentage can increase to 40%. For some situations, 10% of those who develop breast cancer could see their income plummet by two-thirds. And, we are talking just about salary for these decreases, without even factoring in all the treatment-related expenses!

These are the study findings by epidemiologists at Laval University and recently published in the Journal of the National Cancer Institute. Although they restricted themselves to breast cancer, the researchers believe that similar results would be reflected for other cancers. 

They also note that the cost of the illness is continuing to rise, since a growing number of people are receiving multiple treatments, resulting in more time away from work and, in many instances, more travel.

Higher than your chance of winning the lottery

These figures alone are disturbing enough. They become even more alarming when considered in relation to the statistics recently released by the Canadian Cancer Society showing that the incidence of cancer in Canadians will likely reach one in two by 2010. Even today’s statistics are worrisome.  You do not need a scientific calculator to figure it out. 

Lifetime probability of developing or dying from cancer










Source:  Canadian Cancer Society / National Cancer Institute of Canada,
Canadian Cancer Statistics 2008.

Consider someone who is self-employed. In their lifetime, this person has an almost one-in-two chance of going through a year where the income will drop by close to half (perhaps even more), at the very time when facing significant additional expenses for treatment.

Unfortunately, very few people have a financial security plan in place for this possibility.

Illness:  A risk like any other

These figures remind us that illness is a significant financial risk. And just as an investment strategy can reduce investment risk, a financial security strategy can offset health-related risks. This kind of strategy would make use of the various tools available to supplement your income during a period of forced inactivity, or provide a lump sum in the event of a critical illness.

We must not forget that cancer is just one of many illnesses that could keep you away from earning an income. Statistics on health costs in Canada show that cancer ranks third, after cardiovascular illness and musculoskeletal injuries.

By the way, how is that back pain these days?

Taking responsibility

We know how critical the health care issue is in Western countries. In Canada alone, the total provincial expenditures in the past ten years on health care have increased by 7.3% annually. Total provincial revenues, on the other hand, have only grown by 5.9% per year. There’s a conundrum for you:  health sector costs are climbing faster than the governments’ total revenues.

And, that doesn’t take into account the cost to the private sector. Indeed, health-cost calculations cannot be based merely on the cost of care and treatment-related resources. They also include the value of the production lost due to illness and injuries.

It’s enough to make your head spin. The risk is significant, especially with an aging population, and we cannot expect the government and employers to carry it all for us.

Acting now to take charge of something that concerns us directly is basically a question of personal and social responsibility. Fortunately, there are a growing number of solutions, such as critical illness insurance and loss of independence insurance which make it possible for us to take on this responsibility.